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2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
FAIR WORK AMENDMENT
(PENALTY RATES EXEMPTION FOR SMALL BUSINESSES) BILL 2015
EXPLANATORY MEMORANDUM
(Circulated by authority of Senator David Leyonhjelm and Senator Bob Day)
FAIR WORK AMENDMENT (PENALTY RATES EXEMPTION FOR
SMALL BUSINESSES) BILL 2015
OUTLINE
The purpose of this Bill is to reduce regulation of the relationship between small businesses
and their employees by reducing instances where certain small businesses are required to pay
penalty rates.
The original intent of penalty rates was to compensate employees for hours worked outside
the standard Monday to Friday working week. This view is now largely outdated: thanks to
improvements in technology, the development of a global economy and the deregulation of
trading hours, many businesses trade seven days a week while others take the equivalent of
weekend breaks on other days.
As a result, many employees, particularly part time and casual employees, regard weekends
as part of their regular hours.
The Fair Work Act 2009 and modern awards have not kept up with this fundamental change.
This Bill intends to allow small businesses (defined as comprising fewer than 20 employees)
in the restaurant and catering, retail and hospitality industries, as specified in the Hospitality
Industry (General) Award 2010, to operate viably and employ staff, especially on weekends.
Such businesses will still be required to pay penalty rates in certain circumstances, but will be
able to avoid the burden of penalties imposed merely for employing staff on specific days of
the week.
To achieve this, the Bill states that for small business in the specified industries, modern
awards cannot require penalty rates to apply unless at least one of three conditions are met:
the work is in addition to ten hours of work in a day, the work is on a public holiday, or the
work is on a weekend and in addition to 38 hours of work over a seven day period.
NOTES ON CLAUSES
Clause 1: Short title
1. This clause is a formal provision and specifies the short title of the Bill, once enacted, may be
cited as the Fair Work Amendment (Penalty Rates Exemption for Small Businesses) Act 2015.
Clause 2: Commencement
2. This clause provides for the commencement of the Act 12 months after the day on which the
Act receives Royal Assent.
The delay in commencement is to allow an orderly period of adjustment for industry.
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Clause 3: Schedules
3. This clause states that each Act specified within a Schedule under this Bill would be amended
or repealed as set out by the provisions of this Bill according to its terms.
Schedule 1
Item 1
4. This item inserts a new defined term of 'excluded small business employer' into the Fair
Work Act 2009. This term is defined in subsection 23AA(1) of the Bill.
Item 2
5. In accordance with the intent of the Bill to improve employment and business opportunities,
and to align the definition of a small business employer with that of an excluded small
business employer, this item amends the definition of a small business employer in
subsection 23(1) such that a small business employer is an employer who employs fewer than
20 employees (rather than 15).
Item 3
6. This item inserts a new section 23AA. Subsection 23AA(1) defines an 'excluded small
business employer' as an employer who employs fewer than 20 employees in the restaurant
and catering, hospitality or retail industries.
Subsection 23AA(2) states that, for the purpose of calculating the number of employees
employed by the employer at a particular time, all employees employed by that employer in
the industry at that time are to be counted other than casuals (unless they are employed on a
regular and systematic basis).
Subsection 23AA(3) provides that, for the purpose of calculating the number of employees,
associated entities within the same industry are taken to be one entity.
Item 4
7. This item ensures that awards applying to excluded small businesses comply with the intent
of the Act by adhering to section 155A as addressed by item 5.
Item 5
8. This item inserts a new section 155A into the Act to define the terms dealing with penalty
rates payable by excluded small business employers. Section 155A states that a modern
award must not include a term that would require an excluded small business employer to pay
penalty rates to an employee in those industries specified, unless the work is in addition to ten
hours of work in a 24 hour period, the work is on a public holiday, or the work is on a
weekend and in addition to 38 hours of work over the relevant week.
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Item 6
9. This item inserts a new Part 3 in Schedule 1 to the Fair Work Act 2009 (which deals with
application, saving and transitional provisions relating to amendments of the Act). Part 3
includes a definition of amended Act, and that commencement means commencement of this
Part. This item also states that section 155A of the amended Act applies in relation to a
modern award that is in operation on or after commencement, whether or not the award was
made before commencement.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Fair Work Amendment (Penalty Rates Exemption for Small Businesses) Bill 2015
This Bill is compatible with the human rights and freedoms recognised or declared in the
international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011.
Overview of the Bill
This Bill amends the Fair Work Act 2009 to state that 'excluded small business employers'
(employers who employ fewer than 20 full-time equivalent staff in the restaurant and
catering, hospitality or retail industries) cannot be required by an existing or future modern
award to pay penalty rates unless the work is in addition to ten hours of work in a day, the
work is on a public holiday, or the work is on a weekend and in addition to 38 hours of work
over a seven day period.
Human rights implications
The right to work and rights in work are contained in articles 6(1), 7 and 8(1)(a) of the
International Covenant on Economic, Social and Cultural Rights. These articles refer to the
right of an individual to freely choose or accept work, and include the right not to be deprived
of work unfairly. More specifically, these articles also include the right to earn a fair wage
and equal remuneration for work of equal value.
The Bill does not impinge upon the right of employees to earn either fair wages or equal
remuneration. It only affects the circumstances in which certain employers will be required to
pay penalties above the base wage. It also does not affect remuneration for public holidays.
This Bill maintains the payment of penalty rates to financially recognise work performed
above and beyond the usual hours of employment. The outcome of the Bill is intended to
support and encourage greater employment within small businesses.
The Bill does not affect any further human rights in relation to employment.
Conclusion
The Bill is compatible with human rights as it does not negatively impact on the rights to
work or the rights in work.
Senator David Leyonhjelm and Senator Bob Day
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